Economy: Recovery now reaching the financial services sector, says CBI/PwC study
06:00 20 January 2014
The UK’s economic recovery is beginning to feed through to the financial services sector, according to a new report.
The latest CBI/PwC Financial Services Survey covering the three months to December shows optimism in the sector rising at its fastest rate since the study began in 1989, with profitability increasing for the fifth consecutive quarter.
Business volumes growth was strong across all customer categories, with the exception of financial institutions where they were flat. There was a notable pick-up in business with industrial and commercial companies.
Business volumes and profitability are also both expected to increase again next quarter.
The survey also shows that employment grew at its fastest pace since 2007 and expected employment growth for the first quarter of 2014 is also the strongest since the survey began.
Based on the latest CBI/PwC survey figures and their historical relationship with the Office for National Statistics’ workforce jobs data, the CBI estimates that financial services jobs increased by 10,000 during the fourth quarter of 2013 and it expects a further rise of 15,000 in the first quarter of 2014.
That would take employment in the sector to 1.16million, still 52,000 lower than the final quarter of 2008 when the financial crisis hit.
Matthew Fell, the CBI’s director for competitive markets, said: “As the recovery takes root in the wider economy, it is beginning to feed through to financial services firms. Things are starting to look more ‘normal’ after five years of volatility.
“All the key indicators − optimism, business volumes and profitability − are up. But it’s particularly encouraging to see longer term confidence indicators like marketing spend, employment and investment spend also rising strongly,” he added.
Kevin Burrowes, PwC’s UK financial services leader, added: “Banking sentiment continues to improve strongly, mirroring the UK economic rebound. We hope that as trust is earned and rebuilt over time, banks will increasingly be recognised positively for their role in society and their contribution to the UK economy.
“The sector is enjoying growing revenues and volumes of business. Profitability is increasing too. The sector’s confidence is illustrated by its rising headcount, a striking reversal from one year ago, and fewer respondents are concerned about demand than at any point since the financial crisis.”